6 in 10 think people like David Clark are ‘tards

The NZ Herald has surveyed people and they have found that 4 in 10 Kiwis are dumber than a sack of hammers…including Labour’s revenue spokesman David Clark.

Nearly 40 per cent of New Zealanders believe GST should be charged on all purchases made on foreign shopping websites, a survey has shown.

The Government is estimated to miss out on up to $300 million in sales tax each year.

But New Zealand retailers struggling to compete with overseas sellers – whose sales are exempt from GST when they are for less than $400 – will have to wait for any decision on a potential crackdown.

Revenue Minister Todd McClay says the Government wants to see what other countries do first and a discussion document on the issue, due before Christmas, has been delayed until next year.

Kiwis flocked to the shops yesterday for the annual Boxing Day sales – but many are increasingly buying cheaper online from overseas.

A Herald-DigiPoll survey this month found that almost 55 per cent of the 750 New Zealanders polled had bought goods from foreign websites.

Of those surveyed, 53 per cent said the $400 exemption should not be removed as the tax would be too inconvenient to collect.

Surprisingly, just under 40 per cent – 38.5% – agreed with the view of the Retailers Association that the 15 per cent GST should be applied to all overseas online purchases to level the playing field for local retailers.

We aren’t buying from overseas to save on GST, we are buying from overseas because a) We can, b) It is significantly cheaper, even if you included GST, c) We get more choice.

But the most foolish comment on the issue comes from the idiot Labour spokesman David Clark.

Labour Party revenue spokesman David Clark said the Government “needs to explain to New Zealand businesses why they should be disadvantaged by having GST collected when overseas business don’t face that challenge”.

“It seems it would be pretty simple to speak with Amazon and other suppliers to ask them to collect GST since they collect, as I understand it, sales taxes for individual states in the US. If that’s true, then it’s obviously an ideological decision from the Government not to collect it.”

Amazon is the only place we buy things from?

Oh righto…so the Trade Minister and Revenue Minister will be off on a trip overseas to meet off-shore retailers about collecting money on this countries behalf…NOT. GOING. TO. HAPPEN…even under a crazy Green/Labour government. Offshore retailers will simply give a signal similar to this ,,|,, if asked to collect revenues for offshore jurisdictions.

Why do the media give these fools the time of day? I can just imagine their headline on Len Brown. “1 in 10 Aucklanders want Len Brown to stay”

The issue isn’t GST and enabling retailers to compete…it is far greater than that. There isn;t a solution nor will there ever be a solution to this alleged problem.

Though Green Taliban and W First would applaud. Import substitution anyone, failed before and impractical if not impossible now.

Yet again journalists, trained and skilled, revealed as brain dead zombies without a questioning bone in their corpses

Alloytoo

Basic labour is trying to protect farriers from tyre fitment centres.

The world is changing, evolve or become extinct.

In Vino Veritas

40% fo NZ’rs believe GST should be charged. What sort of headline is this? After all, 40% of the people who voted in the referendum on asset sales reckon that they should have been sold. Shouldn’t the Herald have led with “40% of NZ’rs think assets should be sold”?

Damocles

I believe the correct headline should be “More than 60% of NZ’ers believe GST should not be charged”. Or perhaps “Those who don’t buy online from offshore suppliers are envious and want those who do shop offshore to pay GST on their purchases, even though they’d still be paying far less than if they bought from local retailers”.

And as for “Labour Party revenue spokesman David Clark” (whoever he is), I can only admire the la-la-land he inhabits where “it would be pretty simple to speak with Amazon and other suppliers to ask them to collect GST”.

This is the third story that the Herald has run in recent weeks that tries to argue that GST should be collected below the practical $400 threshold. One can only assume that they are doing so to appear to be supporting their advertising clients, the retailers. It’s a bit like being the loyal courtiers of the emperor with no clothes, attempting to distract citizens from the naked truth by arguing that the emperor should wear a tie; then everyone would see how splendid his suit truly is.

As hundreds of commenters have pointed out, on the Herald website and elsewhere, GST is irrelevant and represents only a very small part of the difference in pricing between goods sold overseas and those sold locally. The best description of the problem, and the hint of a solution, is in a small book by Scott McKain (available electronically on Amazon!) called “Digging Wells and Building Fences”.

In the book, Scott reports on a speech by Paul Geason of Telstra Australia which provides a useful rural metaphor about retail challenges today:

“In the vast fields of Australia, erecting fencing to keep the cows on your property is both exhausting and expensive. And, no matter how well your fence is constructed, sooner or later cows will break through it.

“However, when farmers dug wells on their property – enabling the cattle to drink fresh cool water – the refreshment was so appealing to the cows they wouldn’t wander.

“In addition, the deeper and better the well, the colder and more desirable the water became to the livestock.

“Many times, I think companies do all they can to fence in their customers. We spend a lot of money to get them into our fields; then we do all we can to confine them so they don’t get away.

“Wouldn’t it be preferable if we made it so customers really wanted to stay [and shop] with us?

“Wouldn’t it be better if instead of building stronger fences, we committed to dig more and deeper wells?”

I realise the notion may be heretical to retailers dedicated to lowest-common-denominator service, alas, but it helps explain (as one example) why the best independent booksellers can still survive while chainstores like Borders die or (Whitcoulls) evolve into some half-breed gift/toy/stationery environment.

In Vino Veritas

Yup, Clark’s views on GST being collected from suppliers overseas is barking mad. One has to wonder where Labour gets these people from. This must be one of the reasons Labour aren’t renewing their people. They have the best they can get right now, and any people on the fringes are more loony than the incumbents.

Other_Andy

“40% of the people who voted in the referendum on asset sales reckon that they should have been sold.”

And around 40% of New Zealanders voted for Labour or the Greens at the 2011 General Election. I suspect there is a direct correlation.

As for Dr David Clark; he came into Parliament with such expectations, but he has been proven to be no more than a reciter of Labour Party talking points and rhetoric.

Morse

Goods and Services purchased in New Zealand are subject to GST; I am not charged GST on Goods and Services I purchase overseas when I travel, so why should I be subject to another tax, just because I choose to purchase over the internet from a more competitive supplier?

As Alloytoo says, we are a bunch of Blacksmiths, living in an interconnected world. Time to grow up and move on.

justin

But our income tax was reduced and GST raised to keep the changes neutral. Since then we can now see that the global market place is right here at our keyboards. Potentially more and more people will avoid significant GST payments.

blokeintakapuna

Yep. Good. Shouldn’t have to pay a tax on goods or services sourced off shore…

vidarnz

55 per cent of the 750 New Zealanders polled had bought
goods from foreign websites.

53 per cent said the $400 exemption should not be removed as
the tax would be too inconvenient to collect.

So the headline should read.
“almost 100% of online shoppers say they shouldn’t pay GST”

David Moore

“We aren’t buying from overseas to save on GST, we are buying from overseas because a) We can, b) It is significantly cheaper, even if you included GST, c) We get more choice.”
Quite true. I’ve just been looking at buying some stereo gear. It’s less than half the price from the UK even including the VAT at 20%. It’s well over the $400 limit, but even when I pay GST I’m miles ahead.

I’d also say that the 40% of NZ’ers who think GST should be charged are the 40% who don’t really ‘get’ the internet and don’t buy from overseas, they just sit there being plucked by local retailers. What they are actually saying is that other people should pay more tax.

TreeCrusher

Buy it and send it through a freight forwarder, they will open it, make it second hand and put the second hand “value” on the declaration. Even if you do get challenged, which I never have, you will significantly reduce the amount you have to pay.

Macca

Which site do you recommend? Cheers

Michael

If Customs did start adding GST to imports, they would:

Need to create a warehousing system, including a warehouse at entry ports. (So a massive one at Auckland Airport who will charge a mint for it.)
Have to track down the importer and notify them of the amount due.
Need to create an easy payment system for collecting imports.
Need to administer that payment system.
Integrate with all courier companies to co-ordinate release.
Employ hundreds of staff to run such a system.
Employ dozens more to fix the cock-ups the aforesaid staff will make.
And collect $7.50 on an import worth $50, $30 for an import worth $200.

All to protect mostly Australian owned retailers who provide limited range of product and have inconvenient opening hours.

justin

So answer is to drop GST and collect tax elsewhere? Effectively keeping GST become a reverse tariff (raising prices) for those selling here in NZ.

Michael

The answer is for those retailers to stop lobbying Government and to start providing competitive pricing and better range of stock. Given the choice of waiting two weeks for a T-Shirt from the internet and the same design immediately in NZ for 15% more I’d buy in the shop.

Con the Neo

In a lot of cases, it isn’t the retailer that is causing the price diff, it is the importer, or the original maker. With digital cameras, the manufacturers make their money ex factory gate, even when they own the importer in various countries.

Fuji NZ used to pay more cost for a roll of slide film ex factory gates than B&H in NY sell it for retail. So it isn’t the retailers margin adding to that. So the people that the retailers should be talking too is their suppliers.

The Nikon agents in NZ took on and bet Nikon over pricing.

Michael

Parallel importing is legal in NZ – if an importer/manufacturer jacks up the price then it is not illegal for the retailer to go and get the product elsewhere. If an internet shop can undercut you by 50% then the retailer has to improve or go out of business.

That’s the free market at work – it’s the consumer who should have the power, not the Government or the Provider.

Con the Neo

PI is all good and well for things like tshirts, CDs, stuff like that. But PI’d cameras and other electronics are not warranted by many of the suppliers in NZ.

ex-JAFA

Wouldn’t that be the consumer’s lookout? Saving money by purchasing something, and take the risk that it may fail and cost money to be repaired or replaced? Some consumers can be trusted to think for themselves and make their own decisions.

Con the Neo

Yes, I agree. Just pointing out that not all products are the same.

What I am trying to say is, it isn’t automatically the retailers fault that prices are higher here, and we should all be putting pressure on the suppliers as well to try and get better prices in NZ.

Michael

That is just bullshit and contrary to provisions of the Consumer Guarantees Act for a retailer to do that. You are grasping at untruths and manufacturers spin.

justin

This is actually an important in interesting discussion. GST is a big source of taxation, but internet is subverting this income stream for the government. I agree that some business formats will extinct with the net (ala bookshops and travel agencies). However as more and more business flows through internet shopping then more and more people will essentially enjoy cheaper pricing through avoiding IRD clipping the ticket on purchases.
I don’t think it’s enough to say “too bad, it’s a nice loop hole lets enjoy it” (hell I enjoy it). And yes some NZ retailers are creaming it.

Con the Neo

Just on your point about travel agencies, my understanding is, there is no GST on overseas travel, as you are paying for a service that is provided outside of NZ.

But there will still be a need for travel agencies. I have been looking at doing a 4 week work trip to NY, London, Milan and Paris, when timing is more important than cost, to an extent. Travel agents make sorting those things a lot easier than trying to do it online.

GazzW

You’re right Con. There is no GST on interational travel. NZ travel agents were the first retail sector that had to cope with the internet and have adapted extremely well. They worked on a maximum 10% profit margin and there was no middleman involved either so they never worked on excessive margins. Five years ago there were over 800 bricks & mortar travel agents and now just a tad over 300 most of which are owned by large international corporates such as Flight Centre. There have been no redundancies, however, as ex-employees are now self-employed brokers who visit clients in their homes and supply really good advice which is invaluable when planning a longhaul trip. Its a very popular service with corporates too. Just shows that online access does not have to kill off retail if retailers can adapt to the new environment.

GazzW

The reason that international travel is rated zero-GST (not exempt) is that GST was introduced before the internet was around. The travel agents lobbied government very strongly as had GST applied to international travel it would not take the public very long to work out that they just had to book a fare to Sydney and then buy their return ticket to London (or wherever) in Sydney as Australia had no GST at that time.

justin

If Labour removes GST from food. There will be a situation where those living off welfare, purchasing online from overseas may actually pay nothing in way of taxation (I know net that’s the case – but even more so).

blokeintakapuna

To finish first, first you must finish.
Labour are highly unlikely to win the next electIon… But if they somehow do and them implement GST free fruit &veg, the actual cost involved to implement, oversee and collect / seperate the GST will be huge.

…and in typical L&G style, their options will be more taxes elsewhere – thereby totally eroding any consumer benefit and increased government taxation revenue.

Much better to give L&G the fingers and a big friendly “Fuck off arseholes” and vote National. Non problem solved.

TreeCrusher

The whole $400 thing is a joke now, that can and is bypassed by anyone in the know. If they remove it altogether all they will do is catch the new people to the game, with anyone who knows a thing or two bypassing it just as easily as it is now. Maybe this lot should have a chat to the movie and music industry and see how protecting their outdated model is working out for them.

Also with this argument there is one obvious solution overlooked by all involved, remove GST from goods sold locally. Likely to be a whole lot more realistic.

justin

I agree TC that GST removal is the way to level the playing field. It certainly would add to the supply of housing as new build $300k houses have $45k in GST straight off the bat.

TreeCrusher

The internal dilemma I have though is the fact GST is a fair tax leavied on all, regardless of income. That universality is something I am passionate about, but ultimately I believe GST will not survive our move to e-commerce. There are just too many jurisdictions and getting them all to agree will be impossible.

The same thing happens with server farms, they get set up in countries with the most liberal internet laws, if that country tightens up they move the servers to the next country.

timemagazine

This is one of the left’s dreams and the media is ready to obey their wishes.

Hollyfield

I’ve often purchased things online from overseas. One of those items was only 40% of the cost of the same item in NZ, so even if GST was added I would still have saved over half the purchase price. Without exception, all the other items I purchased online were not available in NZ and retailers were not interested in sourcing the items for me – one even telling me they wouldn’t stock my requested item because nobody wanted to buy it. I pointed out to one that we can’t buy it if they don’t stock it. Another retailer said she would order an item from the US for me when she next did an order which would be in about 2 months time. After chasing up the retailer several times over a six month period I ended up ordering it directly from the US myself. The retailer didn’t ever come back to me regarding my ordered item, and it’s now 5 years later. GST didn’t cause her to lose my business, her lack of interest in her customer’s needs is what lost her my business forever.
Retailers are fools if they think GST being added to online purchases will stop people buying overseas. Even if GST is added the overseas items will still be significantly cheaper, and most importantly, actually available. We cannot buy from a NZ shop if they are not interested in stocking the item.

ex-JAFA

I was looking for WiFi-controlled LED lights a few months back. While I wasn’t aware of a specific product, I was certain something must exist because the requisite technologies were mature. Retailers looked at me like I was a fool and said such a thing didn’t exist and, moreover, would be technically utterly impossible.

Next day, i bought my Philips Hue lighting system online and had it installed and working three days later.

Jake McLellan

So why not add it then? It’s only fair. Should we not pay for the roads, schools and hospitals?

Hollyfield

I don’t have a problem with GST being added – as i pointed out the items would still be far cheaper and actually available than in NZ. (But it shouldn’t cost more to administer than would be collected.)

My issue is with the belief that is summarised in the article: “…with the view of the Retailers Association that the 15 per cent GST should be applied to all overseas online purchases to level the playing field for local retailers” and “….David Clark said the Government “needs to explain to New Zealand businesses why they should be disadvantaged by having GST collected….”. These sentences are absolute rubbish. Until retailers start meeting the needs of customers, the customers will continue to go elsewhere. GST being added to overseas purchases will not make one bit of difference to the retailers.

Jake McLellan

Agreed, it shouldn’t cost more to administer than would be collected, and i’m sure no Labour Govt would institute this policy in this case. I agree with you that New Zealand businesses need to do more to compete with overseas companies. However having the same tax on all produces WOULD help greatly. It would even the playing field and in some cases be all the difference some great kiwi companies need.

SDCLFC1 .

Yet you’re OK with McClay’s position of wanting to see what other countries do first? Yes I understand that it is about being measured and reasoned but Whaleoil’s premise is the absurdity of David Clarke suggesting we can negotiate with foreign based private enterprise. National seem quite comfortable doing this when the opition is to dole out a subsidy and/or rebate. The suggestion of autonomy would be enough to send this government into anaphylactic shock. The best we can hope for from a National Government is to provide some white space on the canvas for Labour to provide the colour that moves this us forward in totality.

blokeintakapuna

If Labour are the answer… Then it’s a fuckin’ stupid question.

Remember, take medications ONLY as directed, and also to ensure adequate ventilation in enclosed spaces when using solvent based paints.

Adam Michaels

Too late for David Clark, he forgot to shut the garage door!

Jake McLellan

You might as well have said nothing.

ex-JAFA

A specific one-off rebate to one company for a single transaction is a far cry from ongoing and varying tax amounts to be collected from every overseas retailer… who aren’t subject to our laws.

Callum

So you shouldn’t have to pay GST on imports under $400 because it is still cheaper than buying here? That is retarded logic.
If they can find a cost effective way to collect the GST then there is absolutely no logical reason not to do it, otherwise why collect it on items over $400?

ex-JAFA

That’s a very big IF. The current $400 limit is because the cost to collect GST on smaller values is greater than the revenue that would be realised. Unless a global standard is devised and adopted (which, being a global standard, would be ignored by the US anyway), the calculation and collection of tax revenue is a very costly manual process.

Callum

Big sites (such as Amazon etc) and most other legitimate sites already print all the details of the purchase on the postage label. It is a matter of linking this info to an easy way to pay the GST without packages being held up. You will always have trouble catching people specifically trying to avoid import duties but a random sampling programme and a blacklist of suppliers who intentionally undervalue shipments would get you most of the way there.

slade52

The only GST not collected is the GST that isn’t cost-effective to collect. Any item over about $250 incurs GST at customs.
(This argument conveniently ignores digital products of course)

Adam Michaels

This is a great topic because it shows how important it is for governments to move in tandem with technological changes. On a day to day basis,we, as individuals know we may have to regularly update software to maintain business productivity.
Governments need to make sure that IRD has sufficient flexibility, within the law, to quickly respond to new ways of doing business. Collection of revenue has to be cost effective and fair. We can’t be insisting that IRD flog a dead horse, as the Labour spokesman would have us do. Nor do we want to have to bring even more tax cases to court to have points of tax law clarified.
The world changes- we go forward, not back. Other tax avenues will emerge.

Bad__Cat

45% had not bought from foreign websites.
38.5% thought GST should be applied to foreign purchases.

And the Herald did not connect the two and say that the only people who thought GST should be applied were those who would not have to pay it. Surprised?

Jake McLellan

You say we’re not buying from overseas to save on GST, we are buying from overseas because It’s significantly cheaper, even if you included GST… So why not include GST then? Surely it couldn’t hurt?

GazzW

That’s fine Jake but tell me who is going to collect the GST – the suppliers and the credit card companies will tell the NZ government to fuck off. It’s not their responsibilty to collect and remit NZ-based taxes. Build a storage facility at the airports or Kiwipost branches where you have to front, pay your GST & collect your goods (that will go down like a cup of cold sick in election year)? Alternatively the courier drivers can carry an EFTPOS machine around and you pay at the door – oops! What happens when the punter is not at home?

There is no answer to this other than maintain the status quo. The retailers can sort out their own problems in terms of margins and distribution. If they can’t hack it then they go to the wall. Sorry but it’s a free market economy and NZ is part of it.

Jake McLellan

See I don’t think the foreign retailers will tell the government to “fuck off’, If they want to continue to be able to sell things into New Zealand illegally they will compile. If they no longer want to sell into New Zealand because they have to go to the minimal effort of adding tax (if these retailers are from the states they already will pay tax to 50 different government anyway) then perhaps they’re worried that they have lost there edge to domestic retailers. And of course if they still want to sell things into New Zealand but don’t want to compile for some reason then so what? We shouldn’t fail to pass laws because some MIGHT chose to break them. We past them anyway and try to make it hard for those that chose to disregard them.

GazzW

They won’t necessarily comply as NZ barely rates on their total global sales charts. I’m not sure where you get the info from that Amazon collects tax on behalf of 50 other countries. As far as I know the only taxes they collect are domestic. Amazon.co.uk collects VAT, Amazon.com collects US sales tax for domestic sales.

Jake McLellan

I didn’t say every online retailer will comply, just that most will, and it shouldn’t stop us passing the law anyway. Nor was I talking about Amazon when I mention about collecting state tax. The 50 governments I was talking about was those 50 state governments that american retailers comply with already

out2lunch

99% of the time I buy stuff online is because it simply isn’t available in New Zealand. It’s not even a matter of pricing or GST. NZ does not cater to the niche. However, even when it comes to pricing it is still cheaper to buy overseas even with GST slapped on top. Just goes to show what rip offs these domestic retailing dinosaurs are.

Mr_Blobby

The real problem is the multitude of TAXES that the NZ Government collect. 45% of the GDP is required by the Government to function. 15% here, 50% there, 90% somewhere else, the average is 45%.

The Government is the single biggest economic drag, on the economy, is it any wonder that developed countries struggle to get economic growth.